ARTICLES OF LIMITED PARTNERSHIP

Transcription

1 ARTICLES OF LIMITED PARTNERSHIP FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION. Specimen documents are made available for educational purposes only. This specimen form may be given to a client s attorney for consideration as a sample document, when requested. This specimen form shall not be given to a client. This document should not be used as drafted. It has not been adapted to the specific circumstances or objectives of any individual client, nor has it been prepared to meet the legal requirements of any particular state. Clients should be advised to seek legal counsel when entering into any transaction and in the preparation of all legal documents. All formalities required under applicable local law should be observed. ***** ARTICLES OF LIMITED PARTNERSHIP (NAME OF PARTNERSHIP), L.P. ARTICLE ONE STATUTORY AUTHORITY This limited partnership is formed under the authority of the (name of state) Limited Partnership Act, and shall commence its existence upon the filing of the Certificate of Limited Partnership, and its acceptance by the (name of state) Secretary of State (or name of appropriate state official). ARTICLE TWO NAME OF PARTNERSHIP The name of this limited partnership is (name of entity), L.P. ARTICLE THREE PRINCIPAL BUSINESS OFFICE The principal business office of (name of entity), L.P., at which all required business records are kept, is: (name of entity and address in full). Sample Document - Page 1 of 13

2 ARTICLE FOUR REGISTERED AGENT FOR SERVICE OF PROCESS The name and address of the registered agent for service of process upon (name of entity), L.P. is: (full name and address of registered agent) ARTICLE FIVE NAME OF GENERAL PARTNER The name and address of the general partner of (name of entity), L.P. is: (full name and address of general partner) ARTICLE SIX TYPE OF BUSINESS CONDUCTED (Name of entity), L.P. is in the business of (state type of business activities) and reserves the right to engage in any lawful business permitted by the (name of state) Limited Partnership Act or the comparable Act of any other state in which it may conduct business in the future. ARTICLE SEVEN SUCCESSOR GENERAL PARTNER If the general partner dissolves, dies, withdraws or otherwise ceases to serve as a general partner at a time when there is no remaining general partner, then the limited partners may elect a successor general partner within 90 days after such general partner's cessation of service. If the limited partners should fail to select a new general partner within the required 90-day period, the successor general partner, by default, shall be (full name and address of successor general partner). The withdrawing general partner shall not be liable for partnership debts and obligations arising after (his, her, its) withdrawal from the partnership. Sample Document - Page 2 of 13

3 The successor general partner, whether by selection or default, shall not incur the liabilities and responsibilities of a general partner until such time as (he, she, it) formally enters the partnership in that capacity. ARTICLE EIGHT PARTNERS' CAPITAL CONTRIBUTIONS The founding partners and their respective capital contributions and ownership percentages are spelled out in Schedule A to this Agreement. The general partner shall maintain an updated record of the ownership percentages arising from subsequent adjustments to the partner's capital accounts. Additional contributions to capital may be made by either general or limited partners. When such additions to capital are not proportionately made by all partners, so that the ownership percentages are affected, these additions are subject to conditions. First, the general partner must consent to and accept additional contributions to capital by limited partners. Second, limited partners representing at least (state percentage) percent of the total partnership interest must consent to an additional contribution to capital by a general partner. Consents by either general or limited partners need not be in writing, but will be presumed by default without written evidence to the contrary. ARTICLE NINE LIABILITY OF LIMITED PARTNERS A limited partner shall not be liable for obligations of the partnership nor act on behalf of the partnership except as provided in the (name of state) Limited Partnership Act. A limited partner shall not be entitled to participate in the management of partnership business, unless such limited partner also has an interest as a general partner. ARTICLE TEN VOTING BY LIMITED PARTNERS When partnership business or transactions require a limited partner's consent or vote, each limited partner's vote will be based on his or her percent interest in the partnership. [NOTE TO DRAFTSMAN: For example, if the limited partners together own 90% of the partnership and the general partners own 10%, then a limited partner who had a 20% interest in the total partnership would have a 22.22% voting interest among the limited partners (20% divided by 90%). A limited partner with a Sample Document - Page 3 of 13

4 15% interest in the whole would have a 16.67% voting interest among the limited partners.] ARTICLE ELEVEN A PARTNERSHIP FOR FEDERAL TAX PURPOSES (Name of entity), L.P. is a partnership for federal tax purposes, and will file the appropriate partnership tax returns in which partnership income, deductions, gains, losses and tax credits will be reported. The general partner is responsible for filing the partnership tax returns, and for reporting each partner's distributive share to him or her. The general partner may select the accounting method and taxable year of the partnership within the constraints imposed by the federal income tax laws. ARTICLE TWELVE MAINTENANCE OF PARTNERS' CAPITAL ACCOUNTS The partnership shall maintain a non-interest-bearing capital account for each of the partners. This account shall reflect all contributions to capital by that partner, and the partner's distributive share of partnership income (or loss) shall be credited (charged) to the partner's account each year. Any distributions to partners will likewise be charged to their capital accounts. The capital accounts shall be maintained in strict accordance with the information reported to the Internal Revenue Service. Subchapter K of the Internal Revenue Code, or any successor to Subchapter K, shall control all matters relating to a partner's distributive share of partnership income or loss, as well as the cost basis of the partner's interest in the partnership. ARTICLE THIRTEEN INCOME, DEDUCTIONS, GAIN, LOSS, CREDITS The ownership percentage of a partner in the partnership is used to determine the partner's distributive share of income, deductions, gain, loss and credits, both annually and upon partnership dissolution. If the partnership realizes income by virtue of the general partner's performance of personal services, such income shall be allocated to the general partner and not as earnings on capital. ARTICLE FOURTEEN ADDITIONAL CAPITAL CONTRIBUTIONS Sample Document - Page 4 of 13

5 The general partner has the authority to request (but not to demand) additional capital contributions by the partners. Such request must be made on a proportionate, nondiscriminatory basis, so that each partner has the opportunity to maintain his or her percentage ownership in the partnership. After 60 days have passed since the request was made, the general partner is authorized to reallocate ownership percentages in the event some partners have elected to contribute additional capital while others have not. ARTICLE FIFTEEN WORKING CAPITAL The general partner may retain out of distributable monies such cash reserves as are needed, in its sole discretion, to provide working capital and expense reserves for the partnership. ARTICLE SIXTEEN TERM OF PARTNERSHIP (Name of entity), L.P. will terminate if, at any time, there is no remaining limited partner. Otherwise, the partnership will terminate and dissolve upon a vote to do so by limited partners representing at least a two-thirds interest in the partnership. The consent of the general partner is not required to trigger the dissolution. During the term of the partnership, each partner waives his or her right to compel a dissolution of the partnership. Nor may a partner compel a partition of partnership property. None of the following events will terminate the partnership: death or disability of a limited partner; bankruptcy or insolvency of a limited partner; withdrawal of a limited partner (unless there are no remaining limited partners); death, disability or withdrawal of the general partner (unless no successor general partner is in place after 90 days); Sample Document - Page 5 of 13

6 addition of a new general partner; or any other occurrence or nonoccurrence that could be deemed under Indiana law to terminate the partnership, absent the consent of the partners; in such a case the partnership shall continue without liquidation and the winding up of partnership affairs. ARTICLE SEVENTEEN DISTRIBUTIONS UPON DISSOLUTION OF THE PARTNERSHIP The general partner is directed to wind up partnership affairs promptly following a dissolution of the partnership. All obligations of the partnership and the expenses of windup shall have priority in the winding-up process. The general partner has authority to retain sufficient cash reserves to cover any contingent liabilities. The remaining assets of the partnership shall be distributed in the following order of priority: repayment of loans made to the partnership by a partner, and any remaining obligations for the purchase of a deceased or withdrawing partner's interest; distribution to the general and limited partners of an amount equal to the balance in their respective capital accounts (a negative balance will be treated as a loan to the partner from the partnership); and any remaining assets will be distributed to the partners in proportion to their ownership percentages in the partnership. In carrying out the disposition of partnership assets, the general partner may sell assets, partition assets, or distribute partial interests in assets. The general partner shall prepare an accounting of the liquidation of the partnership, and have the authority to require, as a condition of receiving a distribution, a written acknowledgment from each partner that the accounting has been inspected and accepted; that the general partners are discharged from further responsibilities; and that the general partners are released from liability for lack of prudence or skill in the management of partnership assets, though not for fraud, bad faith, or any undisclosed errors. ARTICLE EIGHTEEN REMOVAL OF GENERAL PARTNER Sample Document - Page 6 of 13

7 The limited partners shall have the right to remove the general partner, to select a replacement, and to add a new general partner, provided at least two-thirds of the total interest represented by the limited partners vote to approve such action. When the general partner dissolves, dies or ceases to serve, the partnership shall be obligated to purchase the general partner's interest. The purchase price and other conditions shall be specified in a buyout agreement separate from these Articles of Limited Partnership. ARTICLE NINETEEN AMENDMENTS TO CERTIFICATE OF LIMITED PARTNERSHIP When the general partner is unable or unwilling to execute an amendment to the Certificate of Limited Partnership to witness the withdrawal and/or addition of a general partner, such Certificate may be executed by the successor general partner and at least two-thirds in interest of the limited partners. ARTICLE TWENTY RESPONSIBILITIES OF GENERAL PARTNER The general partner shall be responsible for the operation and management of partnership business, and shall have authority to do all of the following: engage in transactions for the sale, purchase, lease, exchange or other transfer of property on behalf of the partnership, and to execute the documentation necessary to accomplish such transactions; retain assets in the form received by the partnership without obligation to reinvest such assets productively; employ advisors and consultants as necessary for partnership business; secure insurance policies as necessary to protect the partnership from loss; register securities in street name under a custodian agreement with a securities broker; and Sample Document - Page 7 of 13

8 register or receive title to assets in the name of the partnership. ARTICLE TWENTY-ONE AFFIDAVIT OF GENERAL PARTNER'S AUTHORITY Any party engaging in a transaction with the partnership may rely on a signed affidavit of the general partner in which such general partner affirms his or its authority to carry out the transaction. ARTICLE TWENTY-TWO SUCCESSOR GENERAL PARTNER'S LIABILITY A successor general partner may rely upon the accuracy of the records and accounts turned over to him or her from a preceding general partner. The successor general partner shall not have a duty to have such records and accounts audited, nor shall the successor be liable for any errors or omissions of a predecessor. ARTICLE TWENTY-THREE GENERAL PARTNER'S COMPENSATION The general partner shall be compensated in a fair and reasonable manner for its managerial and administrative services provided to the partnership. The general partner shall also be reimbursed for all necessary and reasonable expenses incurred on behalf of the partnership. ARTICLE TWENTY-FOUR NO BOND REQUIRED The general partner, including any successors, shall not be required to provide a bond to secure the general partner's performance. ARTICLE TWENTY-FIVE CONSENT OF LIMITED PARTNERS REQUIRED The general partner cannot engage in any of the following transactions unless it has the consent of at least two-thirds in interest of the limited partners: incur partnership indebtedness in excess of a loan-to-net-book-value-of-assets ratio of 50%; Sample Document - Page 8 of 13

9 sell substantially all of the partnership assets in liquidation of the partnership or other cessation of its business; or compromise any claim or controversy in an amount exceeding 50 percent of the total value of partnership assets. ARTICLE TWENTY-SIX RESTRICTIONS ON LIMITED PARTNERS The limited partners may not participate in the management or operation of partnership business, nor bind the partnership in any way, unless such limited partner is also the general partner and acting in the latter capacity. ARTICLE TWENTY-SEVEN RESTRICTIONS ON TRANSFER OF PARTNERSHIP INTERESTS A partnership interest in (name of entity), L.P., whether general or limited, may not be transferred or encumbered without the consent of at least two-thirds in interest of the limited partners. Such restrictions are intended to preserve the relationships of trust upon which this partnership is formed, as well as the partnership's capital structure and tax status. The limited partnership interests have not been registered as securities under federal or state laws, and may not be offered for sale unless so registered, or unless an exemption is obtained. There are certain exceptions to the foregoing restrictions, which allow transfers of a limited partnership interest in the following circumstances: The personal representative of the estate of a deceased limited partner succeeds to the rights and powers of the limited partner. The limited partner may designate a beneficiary (or beneficiaries) for his or her limited partnership interest, and this will be binding upon the partnership if delivered to a general partner within 60 days of the limited partner's death. The personal representative of an incapacitated limited partner succeeds to the rights and powers of a limited partner if active pursuant to letters of guardianship or a durable power of attorney. Sample Document - Page 9 of 13

10 A limited partner may transfer his or her limited partnership interest during life for the following purposes: to make a gift in trust for the limited partner, his or her spouse, and/or his or her descendants; or to make a gift to a qualified public charity under Internal Revenue Code Section 170(c). The recipient of a limited partnership interest transferred in any of these ways shall be bound by these Articles of Limited Partnership; however, the recipient of any other type of transfer will not be recognized. During any dispute, the partnership is not required to distribute the income of the disputed partnership interest, but will credit such income to that interest's capital account. ARTICLE TWENTY-EIGHT PARTNERSHIP INTEREST ACQUIRED BY COURT JUDGMENT If a third party acquires a limited partnership interest as a result of a court judgment, the partnership will then have the option to acquire such interest from the transferee at its fair market value within 90 days of the third party's acquisition of the interest. The fair market value shall be determined by a qualified business appraiser who is a member of the American Society of Appraisers. The transferee must accept or reject the appraisal value with 60 days of its receipt. If not formally rejected, the valuation therein will be deemed accepted. If the appraisal is formally rejected, the transferee will be a non-voting owner of the limited partnership interest until the valuation dispute is resolved, and the sale carried out. The general partner may transfer the partnership's option to one or more of the limited partners, provided at least 60 percent in interest of the limited partners consent. ARTICLE TWENTY-NINE NEW LIMITED PARTNER The consent of at least two-thirds in interest of the limited partners shall be required to admit a new limited partner. When a new limited partner is admitted, the ownership percentages of partners will be adjusted accordingly. Similarly, the redemption of a partner's interest or its acquisition by the partnership will require adjustment of the ownership percentages of the remaining partners. ARTICLE THIRTY GENERAL PARTNER'S POWER OF ATTORNEY Sample Document - Page 10 of 13

11 The limited partner's appoint the general partner as their attorney-in-fact to execute, certify and record all partnership documents. This is a durable power of attorney and will survive any incapacity of a limited partner. ARTICLE THIRTY-ONE NOTICE Any notice mentioned in these Articles of Partnership will be valid if delivered in person to the intended recipient if sent by certified mail with return receipt requested. Each partner shall be required to provide the general partner with his or her current address, and to notify the general partner of any change of address. ARTICLE THIRTY-TWO HEIRS, SUCCESSORS, AND ASSIGNS These Articles of Partnership shall be binding upon not only the contracting parties, but also upon their personal representatives, heirs, successors and assigns. Dated this day of, (year). Accepted for the Partnership: By: (typed name), General Partner State of County of The person above named appeared before me on the above date and acknowledged that (he or she) executed the preceding document as the duly authorized agent of (name of entity), L.P. Witness my hand and seal this day of, (year). Sample Document - Page 11 of 13

12 Notary Public My Commission Expires: ***** SCHEDULE A GENERAL PARTNER: (name and address of General Partner) Capital Contribution: $ Percentage of Ownership: percent LIMITED PARTNERS: (name and address of Limited Partner) Capital Contribution: $ Percentage of Ownership: percent [repeat for each Limited Partner] ***** Sample Document - Page 12 of 13

13 This information is provided by American General Life Insurance Company (AGL) and The United States Life Insurance Company in the City of New York (US Life), members of American International Group, Inc. (AIG). All companies mentioned, their employees, financial professionals, and other representatives, are not authorized to give legal, tax, or accounting, advice, including the drafting or execution of any legal document. Applicable laws and regulations are complex and subject to change. Any tax statements in this material are not intended to suggest the avoidance of U.S. federal, state or local tax penalties. AGL and US Life shall not be liable for any loss or damage caused by the use of, or reliance on, the tax, accounting, legal, investment or financial items contained in this material. FOR FINANCIAL PROFESSIONAL USE ONLY-NOT FOR PUBLIC DISTRIBUTION All rights reserved. Sample Document - Page 13 of 13